My thoughts on International Village

Yesterday, someone on Twitter called me out for being silent on the subject of International Village, the $350+ million dollar retail and housing development being proposed for Ypsilanti’s 36-acre Water Street property. According to this person, who was posting under a pseudonym, my silence on the matter was “deafening.” It’s something I’ve heard several times over the past week or so, albeit is somewhat less dramatic terms. A lot of people have been asking me to weigh in on the development, which, according to representatives of the Troy-based development team, is going to be largely funded through Chinese investment. And some, it would seem, have begun to speculate on why it is that I’ve been silent… So, after last night’s marathon City Council meeting, during which our elected representatives agreed to move forward with the purchase agreement, I thought that I should probably say something, even if it comes across as unsatisfying, which I’m sure that it will to many of you reading this.

On one hand, I don’t want to contribute toward thwarting what could be our last, best hope to see the toxins on Water Street dealt with, and put the City back on solid financial footing. And, on the other, I don’t want to come out in favor of a plan that I have real and serious concerns about.

And then there’s the fact that, as some of you may know, I have a competing interest in Water Street. Or, at least I did… Long before International Village came to the table, you see, I’d expressed an interest in acquiring a parcel along the river for a project of my own, which I’d rather not get into here at the moment. All you really need to know for the purposes of this conversation is that, while I’d been getting some decent traction with the idea, things pretty much stopped with the announcement that the Country Parks Department had pulled the plug onthe idea of building a recreation center on the site, which I’d been depending on to bring roads, water and electricity to the site. None-the-less, though, I still have architectural drawings and a business plan that I think has a tremendous amount of potential. So I suspect that’s another reason why I’ve been quiet, in addition to just being confused — I don’t want anyone to think that, by raising questions about this development, I’m somehow attempting to manipulate things in my own favor.

And, then there are my feelings about Chinese investment in the United States, which according to Fortune, “soared to $45.6 billion (in 2016),” tripling what it was just the year before. While I don’t have a problem with investment, even foreign investment, in general, there’s something about China’s bold push to acquire companies and land in the United States that concerns me. And, for what it’s worth, I don’t think it’s xenophobia that’s driving that feeling. I think it’s just that I’ve had the occasion to know several brilliant, young students from China over the years, many of whom have relayed the same story about the environmental and moral sacrifices that have been made in their country in the name of exponential growth and tremendous prosperity. And I think that’s perhaps given me a little different perspective on those wealthy Chinese business owners who are now so anxious to purchase citizenship through mechanisms like the EB-5 visa system those behind International Village say they’ll be employing.

Let’s just say that, when you have a friend tell you that she has to send respirators back home to Beijing so that her parents can breathe, you have a different appreciation for the sacrifices that are being made in order to produce both cheap goods and untold wealth… wealth that, for obvious reasons, people want to get out of the country, and into more stable investments. [The friend I’m thinking of has to send respirators back because the ones her family can buy in China are invariably cheap knock-offs that don’t work as advertised.] And I’ve been hearing from Chinese friends for over a decade now, about how everyone with money, either in government, or in industry, moves their families and their wealth out of the country, leaving the others behind to deal with the consequences of unfettered capitalism. So, being completely honest, I have a hard time looking at anything related to the EB-5 visa system objectively. And that’s one more reason I’ve been reluctant to speak up. I don’t want to contribute toward tanking a development that could be good for our community, just because I harbor a deep dislike of the EB-5 system, which, by the way, Vox recently described as, “riddled with scandal.”

And, lastly, I probably haven’t spoken up until now because I actually like members of our Planning Department and City Council, and I sympathize with them. As Councilman Vogt pointed out last night, it’s not easy to say “no” to a credible developer, especially when the citizens of Ypsilanti, in good faith, just voted to raise taxes on themselves to pay the debt associated with Water Street, with the understanding that our elected officials would do their best to bring in a developer as soon as possible, and terminate said millage. [To those in the audience who were talking about how International Village could force rental rates up across the city, Vogt responded by pointing out that homeowners were suffering too, paying higher taxes, and, in some cases, forgoing medication to do so. I don’t know how accurate of a comparison that it is, as I suspect, in most cases, homeowners are far more secure than renters, but, as it was something that I hadn’t considered before, I thought that I’d include it here.] And I know that our overworked and under-appreciated City staff is doing their best to make something positive happen for Ypsilanti. Whether or not you agree that International Village, as explained to us last night, would be a positive for the community, I think you’ve got to admit that our folks have been working their asses off to find something that will see the toxins dealt with, create jobs, and increase the tax base, so that we no longer have to cut away at city services and contemplate the prospect of receivership, which would truly decimate this city that we love.

So, yeah, for all of those reasons, I’ve been quiet… Like many of you, I’m confused and frustrated. And, without a solution to suggest, I’ve felt it best that I just stay out of it altogether, and watch how things unfold from afar.

But, then, last night, after spending about five-and-a-half hours watching community members address City Council, Council members discuss the still unclear terms of the deal, and representatives of International Village talk about what they have in mind, I decided that I might as well put in my two cents and ask our elected leaders, as many did last night, to slow things down, giving us more time to think things through.

I won’t go into a lot of detail here, but I saw and heard several things last night that concerned me greatly, and I’m not just talking about the fact that the International Village construction manager described their proposed architecture as “soft… like a woman.”

OK, so here are just a few rough, admittedly incomplete notes. Please take them for what they’re worth, and in the spirit in which they’re given.

1. Like I said above, this could just be coming from my anti EB-5 bias, but I worry that that primary business of International Village may not to run a successful business in Ypsilanti, but instead to facilitate the purchase of visas by wealthy Chinese individuals. I think this fact may have been overlooked by many, but, during the entire presentation, the representatives of the company did not once mention their justification for building 1,100 dwelling units, which would include 150 hotel rooms and 110 condominiums. Maybe it was just me, but it seems as though, this whole thing has been approached in a backwards fashion, starting with the fact that the developers intent to raise $250 million by essentially selling 500 EB-5 visas, and then working in reverse from there, instead of first looking at what our community actually needs, and would support, and going forward from there to determine a budget, etc. And, as someone in business, that concerns me greatly. So, if they have a true business justification for what they’re building, I’d love to see it. I know, because I just called, that the Peninsular Place student housing complex is at capacity, so there may be a real need for more student housing, but how much? And what evidence do they have that people will be willing to pay the rates that they alluded to last night, which they suspect will be as high as $2.10 a square foot per month in some units? Have they conducted a through study of the local real estate market? Do they have anchor tenants onboard? Is there anything at all that would demonstrate this could be an economically feasible development?

2. As they say that this development, although funded by Chinese investors, will be equally welcoming to non-Asians, I’m having trouble understanding the Chinese design sensibility described by International Village’s construction manager. Again, it seems to me, it has less to do with what would actually work here, on Water Street, over the long term, and more to do with what would resonate with Chinese investors. I know it may seem like a small thing, but it signals to me, again, that the long term viability of this development may be secondary to other, more immediate, objectives, like creating an opportunity for Chinese business people and their wealth to make their way to America.

3. There seemed to still be a number of significant unanswered questions… As Councilman Robb pointed out, while these developers have given us their word that they won’t come back to the Ypsilanti taxpayers, requesting that we give them millions of dollars in tax credits to deal with the remediation of Water Street, there’s really no way to be sure that they won’t, at a later date, essentially try to extort said tax credits from us, threating to walk away if we don’t give in. [There would be a small financial penalty as outlined in the current purchase agreement, but, was Robb pointed out, it’s just a fraction of what they could ask the City for.] And, after listening for over five hours, it’s still unclear to me how the permanent, local jobs these developers have promised are counted. [I should have mentioned it earlier, but, for these Chinese investors to receive their visas, International Village first has to demonstrate significant job creation over a period of at least two years. No one, however, as far as I could tell, knew what kind of jobs counted, or how many jobs would need to be created. Furthermore, there seems to be a history when it comes to EB-5 visa developments of not actually delivering the jobs promised.]

4. While I don’t want to name individual members of Council, I was surprised by what, at least to me, appeared to be a significant misunderstanding of the EB-5 program, with at least one councilmember seeming to believe that these wealthy Chinese investors would be moving to Ypsilanti once their visas were granted. [That isn’t how the program works. Once these investors have their visas, they can live anywhere in the United States, and it likely won’t be Ypsilanti. In fact, the only reason this development, as far as I can tell, is being discussed in Ypsilanti, instead on either the east or west coast, is because, under the rules of the EB-5 program, investors only need to invest $500K per visa here, where it would be $1M in a more financially stable area.]

5. Maybe I missed it, but I didn’t hear that this Troy-based development group had done anything even remotely like this anywhere else. If they have, I’d like to know how it went, how many jobs were created, etc.

I could go on… There was lot that was observed last night, and many pages of notes were taken. I suspect, however, that’s probably sufficient for now… In closing, however, I’d like to say that, even though this is messy and ugly, I’m very happy to be having this conversation with all of you. In most cities that I’m aware of, it seems like, by the time people start talking about things like these, it’s too late. Here, though, it feels like we might still have time to work together to plot a course forward that we’re all happy with… one which, while receptive to creative ideas for growth, is also sensitive to the needs of all citizens, and not just those of us who are fortunate enough to own homes.

I think I speak for a lot of folks when I say that I moved to Ypsilanti not just because it was cheaper than Ann Arbor, but because it had more heart. I’ve loved this community since I first came here in the early ‘90s, and I knew early on that this is where I wanted to put down roots and start a family. I know change is necessary, but there’s smart change, and there’s the kind of change that takes generations to undo. I know it’s a difficult thing to accomplish, but I have to think that we have enough smart, dedicated people here to find a way that we can all advance together, and still retain what it is that we value most, learning from the mistakes of others, and always challenging ourselves to do better.

And I do think, in the case of International Village, we can do better… Maybe, however, that’s with these same developers. It seems to me that they, after all, have assembled a credible team. What I haven’t seen from them yet, however, is a willingness on their part to engage with the City’s citizens at a meaningful level, in hopes of building a relationship that might better serve the interests of all parties. What form that might take, I’m not sure. Now that Council has voted to move forward with the purchase agreement, though, and the development team has the security of an agreed-to deal, maybe we can find a way to facilitate a conversation, during which the developers can actually find out who we are, what we value, and what we thing, given our history, might actually work on Water Street. [One piece of advice to the developers, assuming this keeps moving forward. When you’re in a public meeting, like the one last night, don’t spend your time texting. Instead, listen. You might actually learn something of value about this town you claim to care about.]

One last thing… I’d advise City Council to move slow and steady, bringing more people into the mix, and asking more questions. And, personally, if I hear a developer ever again suggest that we have to move faster, I’d be happy to have them walk, even if it means paying more in taxes. This is just too important to the future of our City to fuck up… The development of Water Street, as we’ve been saying for years, will determine the trajectory of our city for at least the next 50 years, and we can’t allow anyone else’s timetable to dictate how quickly we move. This is an investment for them. This, however, is our home.

55 Comments

You didn’t mention the all expenses paid trip to China that our mayor is now on. No one knows how it’s being paid for, but speculation is that the developer is funding it, even though the money is coming through a Wayne State student group. It’s looks very fishy.

The affordable housing arguments from DAY and others in my mind are a distraction when discussing the International Village.

Given the millions required for remediation of the contaminated land, there are zero feasible affordable housing options at Water Street.

Rents are rising far faster than in inflation regardless of what happens to Water Street. Rents are going up $50+/month per year (or more) in Ypsilanti and would not change if an affordable housing (often in the form of Section 8) plan was approved.

People are being priced out of Ann Arbor, while more jobs are being created in Ann Arbor. Ypsi is a close commute, the entire city is walkable, and it’s still very affordable for most. Having a downtown and Depot Town “districts” and strong school of choice offerings nearby (A2. Saline, Plymouth-Canton) makes it appealing to young families looking to rent or purchase too.

The housing and rental markets are insane, combined with Michigan’s lack of rental inventory, makes it impossible to curtail the current rental rate increases.

Pete Murdock posted something on the Ypsilanti Area Facebook Page that was eye opening. $23 million dollars of the $80 million Brownfield remediation is proposed to be paid by TIF – i.e. Ypsilanti taxpayers. It’s on Steve Pierce’s post about EB-5 Visas. Your recent tax millage will pay for it, not the wealthy Chinese investors.

I believe that the investors have to create 10 full time jobs that last at least two years apiece to receive the visa. The jobs have to be proven to be generated in some way by this development – hotel employees, more AATA staff, maintenance people and, I think, a certain percentage of this number can be included in those involved with the construction of the site. The developers said approximately 2600 total jobs. In the research that I’ve done regarding the EB5 program, confirming the number of jobs generated and their benefit to the community involved has been difficult to confirm or prove.

I thought the way the International Village lawyers laid out the process seemed suspicious, like baiting a gambling addict with the hopes of recouping what they’ve already lost by paying for the opportunity to see another card.

At this point, what is the penalty for the city to back out completely? I really don’t know how I feel about this development either. I don’t see how a plan that both parties agree on could happen by December 31st.

The other way to look at International Village is a method for getting discounted development that will ultimately be substantially different from the initial proposal. While the EB-5 program may be relatively new in the United States, Canada has had a similar program for a much longer period of time, whereby an immigrant with some knowledge and capital was granted permanent residency status in return for starting a successful business. The initial intent of the program was that entrepreneurial people would be attracted to move to Canada and bring their skills and money to build a viable business. And indeed, that did occur, as the individuals that did come over scraped together the money to be eligible, and once there, did their best to keep the business going, as that was their living. However, the program did not account for individuals with so much money available to them that they were willing to take losses on the initial business investment, as it was not meaningful to them, and once the minimal requirement was met, the business was abandoned. If this project goes forward, then maybe the best plan is to anticipate the inevitable financial failure of the business model and be prepared to purchase the individual properties at a significant discount, so that it can be redeveloped again, but with the sunk costs of construction already paid for.

If you knew that the investors in International Village weren’t really serious about keeping it as a financially viable concern past the time period for permanent residency elibility, then why not wait until that time period has expired and make a low ball offer for the property? I’m sure that other property investors are doing just that. The development won’t be abandoned, just redeveloped. Why not consider putting in desired stipulations for development that would be long term and survive ownership transfer? This would be desirable for any development, as any developer could go bankrupt. Think of this as a possible preplanned bankruptcy scenario, but without the formal filing.

The head of construction who spoke for the development team speculated that out of the maximum number of ‘permanent’ jobs (2,600), 1,500 would be from construction. The internet says that to be counted as permanent in this program, a construction job need only last for two years.

For anyone who was at the meeting, didn’t the development team seem a little unsure and down on this topic even as they were selling it to us?

Thanks for putting all this down, Mark. You hit on pretty much all the key considerations of this complex situation.

The developers presentation seemed pretty out of touch with our community (the “soft like a woman” comment notwithstanding) and my sense of how IV would play out downtown over decades isn’t exactly a rosy scenario. There are a number of dynamics, outlined by you and others in the public comments, that seem likely for friction and some unfortunate ripple effects. We’re also not talking in Disney World terms, with a property that could sit dormant and contaminated for years or decades to come, so the costs of inaction for our community are also significant.

My two big questions at this point remain:
a) Will the developers (and City) listen to our citizens and make a real effort to engage and adapt their plans as possible to show they actually care about this community (not just a pass through landing place for their visa program)?
b) While asking the developers to address affordable/low income housing directly might likely not yield much, what about us demanding that from our City officials if this project moves ahead? In other words, could Council commit to designating a significant piece of the economic benefits of IV (e.g., 30-40%) to addressing the needs of the most vulnerable in our community and those most at risk for displacement?

You should be very suspicious of this plan, as Mark alluded to: they only care about the visas, not the development. There are tons of stories online about the fraud and hand-waving that goes on with these developments/proposals. Given that Mark’s major take-away was that they dont seem to know or care about anything about Ypsi, and are just backdooring a development onto the visa program, I’d be very concerned.

Most of the “investors” are aware that they will likely not see any return on their money. They are paying $500k for a visa.

This is a well-rounded analysis of the issue at hand as it relates to the proposed International Village.

As for the jobs or promised ones, exactly where would they be created? Washtenaw County’s unemployment rate is 4.5% as of July 2017, fairly on the lower side and could be jobs with this development that are temporarily related to construction.

Nevertheless, besides construction jobs which are temporary in nature, where is the developer seeking exactly to add the promised jobs.

Another concern is the mention in previous readings of one of the reasons the developer is seeking this site is its conjunction with the being constructed, the American Center for Mobility. This is concerning for two reasons.

With a test run facility similar to the one being built in Ypsilanti Township, the jobs are generally high-tech and skilled. There are training programs being started at WCC focused to prepare local residents for the jobs likely to be offered at the American Center for Mobility. This is great as local residents trained in the field of Mobility Transportation should indeed be considered for those jobs, which will be less in number than the previous GM Powertrain facility that formerly existed on the site.

So why would the American Center for Mobility be conjoined within the developers language the proposed International Village? That is an unknown factor at this time but concerning nonetheless.

Lastly, the on-going debate regarding gentrification is more than just a buzz word and is real to those who might be impacted by this development as its currently being presented by the developer.

As this article pointed out strongly, there should be a concern on why the EB-5 soon-to-be eliminated program is being used by those in countries, like China, who have the financial means to buy the Visa while others in that same country are facing the environmental impacts of unregulated uber-capitalism.

There are more why questions than yes answers at this time — and taking the time to discuss, debate and analyze “Why” is rarely ever the wrong action to take.

I was, unfortunately, unable to attend last night due to prior commitments.
Mark, thank you for taking the time to write out your observations. They largely reflect a lot of what I have been thinking and feeling about the whole thing. It has sounded fishy to me from the beginning; and frankly the fact that so many people came away from yesterday’s meeting not more clear, but less, is a huge red flag. If the residents of this city actually want a viable alternative, and if no other outside investment groups step-up, and if the City admin is willing to take another 1-2 years to develop a solution, we could create a community-owned REIT (real estate investment trust) to drive the development, construction, and management of the property. It’s been done plenty of places, including in southwest Detroit (see Southwest Solutions as an example). Thoughts?

If he runs a state-wide EB-5 development program but was never consulted about this development, that concerns me. I’d like to know how these things go wrong, How the jobs produced are calculated, what kinds of jobs and at what pay level qualify, etc. Just basic due diligence.

But I also expect some due diligence from those opposing the project. Are there viable alternatives? Have other projects, like the one in Southwestypsi. Detroit, dealt with remediation of this level of environmental contamination. I don’t see how land trusts or other community funding mechanisms could work given the needed clean up. I also seriously doubt the kind of capital required for a project of this scale can be found in Ypsilanti. I have heard over and over in Ann Arbor among people who resist growth, including affordable projects in their neighborhoods, that there ‘must be’ an alternative to this project here. But is there? You can’t claim to actually be supporting the marginalized if you are only against things and don’t take responsibility for being for *viable*alternatives. At some point advocacy needs to produce results.

I don’t think concern about shitty Chinese construction and environmental standards is in any way applicable to a project being built stateside, by a local contractor. I’m not sure why that is a concern. Sure the Chinese have massive human rights issues, predatory practices and gross income inequality. So does America. Sometimes I think we fear the Chinese (this is well documented) because they are so much like us. We are different only in our high degree of regulation and oversite of such projects. And that matters in this case.

It’s great that the citizenry is so engaged. Maybe citizen resistance pressure can make this project better. I’ve seen a lot of examples in A2 of developments becoming worse due to citizen resistance. Some of that is a result of the additional costs of delayed construction and multiple re-designs. Delaying these things does not always produce better projects.

Back to jobs for a moment. While it’s true that we have a 4% unemployment rate in Washtenaw county, many people are under-employed and under-paid. The right kinds of economic development can help that. The wrong kind– doesn’t. Right now most of the outside economic development happening in the county is coming from overseas, not other parts of America. (Toyota, etc) They come here because it’s an international community and they feel comfortable. I suspect that is why this development is staged the way it is (though I’m not sure faux Asian gates etc are really going to be a draw) and I bet that’s why city reps are in China right now. There is still the old plant and land on the other side of the river from water street… Maybe they are trying to draw the manufacturing jobs so many on this site miss.

Thank you for weighing in Mark. I think your perspective reflects that of many less vocal residents. Props also to Defend Affordable Ypsi for elbowing some Room for the citizenry to be heard and ask important questions.

I think there’s a good possibility that you’ll still get your chance at the property, Mark. Financing on the Chinese investors’ end could get withdrawn (or lost) suddenly. If the deal isn’t finalized within 6 months or so, and even if it is, I wouldn’t be surprised if it fell apart.

I am in the category of someone who doesn’t know much at all about the project, etc., so I appreciate the update/perspective. The EB-5 visa stuff/perspective is interesting, though I’m not so sure I am as against that as you are. And while I think the project as proposed seems a little weird, if it cleans up the toxins, shores up the tax base, and brings jobs/businesses into Ypsi, well, okay.

But I gotta say this seems about as likely to happen as the previously planned rec center, as the light rail system I’ve been hearing about for the 20 years I’ve lived in this area, etc., etc.

Of course there will not be the promised jobs. Ever since the Michigan Supreme Court ruled in favor of GM in Ypsilanti Township v General Motors, the lawsuit the Township filed against GM after the Township spent millions of dollars on infrastructure to support the Willow Run Assemble plant. GM promised thousands of permanent jobs would be created. They got their tax breaks and then picked up the plant and moved it to Arlington Texas. Our Supreme Court found that it is quit all right for businesses to engage in “Puffer y and Hyperbole” when negotiating deals with Governmental units.
Of course we are being sold a bill of goods and will end up with the short end of the stick.

Given that no white knight will ever show up with a development proposal, I don’t see how the city can do anything but green light it and hope for the best.

I’ve got the same view as Steven Krause. I’m a homeowner who’d like to see something happen with Water Street. At the least, if we can get the property cleaned up, provide some local jobs, and get roads and electricity in there, I think that is worth a few visas. With regards to affordable housing, I still don’t understand how adding more housing makes housing more unaffordable.

Thank you all for your comments. I’m liking them… Now, to answer a few of your questions.

No, I didn’t mention the trip to China, as, again, I don’t know what to say about it. I’d like to give the four individuals who are presently on their way to Beijing the benefit of the doubt. It does look strange, though. As I understand it, the developer offered to pay forthe trip, but, rightly, someone at the City said that would send the wrong message, given that the folks being sent over to be wined and dined would also be the ones negotiating the deal with International Village LLC. According to press reports I’ve seen, the trip is instead being funded by a Chinese student group at Wayne State University. As some have pointed out, it does seem odd that a student group has the financial wherewithal to send Ypsi elected officials and City staff to China. I suppose, however, it’s possible. And I hope, for the City’s sake, it’s not later discovered that the developer just funneled cash through this student group to pay for the trip, which, if true, would look even worse than if they’d just paid for the trip outright. In fact, I think if it’s discovered that the trip was paid for through International Village LLC, that would be enough to kill the deal outright. But let’s hope that’s not the case.

As for the idea that we should just let these folks build something that’s poorly thought out, in hopes that in fails, so that we can then buy up the buildings for a fraction of their cost, I suppose it could play out that way. I’d prefer, however, to just do it right from the outset, working collaboratively with the developer to build units that fit the city, and launch businesses that will be successful.

As for my idea, yeah, I suppose it could come back. Without a bigger developer paying to have water, sewer, roads and electricity brought onto the property, though, I don’t see it happening… especially with the remediation issues. It’s not exactly the kind of thing we can start a GoFumdMe campaign for, as it would cost millions of dollars. Still, though, I’m not giving up. My idea is really solid, and I know that it would work, but it would really only address a few acres.

I don’t know about Real Estate Investment Trusts. I’ll try to make town to check them out.

OK, that’s it for now. I’ve got a kitchen to clean.

Oh, for what it’s worth, I’m disappointed that no one called me xenophobic, as I really wanted to play the, “But my family is Chinese” card.

I am transitioning to Ypsilanti but have not lived there long enough to understand all the issues. I have dealt with poverty issues for 26 years in Madison Wi and many more in Chicago. My sense of where Ypsilanti is at currently is that if middle class market rate housing is not built , housing available to low income or moderate income families will be bought up or driven up in costs by people wanting to live here . In Madison that is happening mainly due to the development of a lot of $90,000+ /year jobs. My sense is that is not what we are seeing in Ypsilanti instead new housing may defuse a bit the current pressures on the housing market by syphoning off some people currently entering the market. That doesn’t solve the affordable housing crisis but may not aggravate it either. Solving that issue basically is implementing a countywide plan for affordable housing for those who can’t work and developing better paying jobs for those that can so they can pay for housing. The TIF issue does need to be looked at carefully as this I thought was being sold as the city not putting in anything into solving the environmental problems and TIFFs unless structured very carefully can be problematic and they would delay the tax benefits from the proposal which I thought is the intent of the project from the beginning .

Copied from facebook, because there’s a lot of confusion about the TIF:

Right now, the city collects no taxes because they own the property. If they sold it with no brownfield, it would be assessed at $1.13M (“full cash,” or $0.565M taxable) and collect $37K (which I believe is just the city’s cut, not including another $9K that goes to the schools through the county).

So let’s say there’s no Brownfield TIF. The agreement is to raise the value to $150M within 3 years, and pay $20k each month if that’s not timely (let’s assume that means any month after 3 years that it’s under $150M). So if they put in $50M/year, then 2018 revenue would be $37K, 2019 would be $1.7M, 2020 would be $3.3M, and 2021 on would be $5M/year. If they don’t make it to $150M in time, then we get some relative portion of that with an extra $240K annual penalty.

My understanding of the Brownfield TIF (based on a cost-benefit analysis I did of the affordable housing proposal from 2014), is that until the value is raised to $3M the owner doesn’t pay the taxes. Assuming they do actually plan to develop, this would only apply to that first $37K, because they would be assessed over $3M for the 2019 tax year. So if they pay $200K ($5K x 40 acres) instead of $40K (at $1K/acre), then the city gets an extra $150K at sale, instead of waiting for $37K when the 2018 taxes are due, but then everything else after that is pretty much the same.

I think the reason they probably didn’t intend to apply for the Brownfield was that with a project of this size it’s a moot issue. Brian Robb can probably tell me if I’m missing something here, but I just don’t see $20M coming out of this anyway.

—–

A knowledgeable source has confirmed my general understanding of the issue, so unless Brian Robb can give a detailed rebuttal, I think you are all just completely misunderstanding how the TIF works. Which is a shame, because you’ve been working on this issue for months, and this isn’t the first Brownfield that councilor Robb has seen in his tenure.

(PS, the “you” in the above paragraph is the FB user I was responding to, not MM or anyone here.)

Vile racism. We must renounce our privilege and pay for the development with our own money, sponsor our guests with plane tickets and visas and provide top-notch benefits and a path to citizenship in six weeks.

I too have a lot of mixed feelings on the development and EB5, but I’m pleased to see City Council voting to go ahead and see how things are going to shake out with a development agreement that the City does need to have a strong voice in shaping. I feel that to do otherwise would have signaled an unwillingness to pursue development opportunities to any future developers if a development agreement is not reached with this project.

I also don’t think the Chinese Business Community is the evil entity portrayed by some of the critics on here and in FB discussions and I say this as someone that has had positive interactions with them through the Detroit Chinese Business Association (DCBA), who has been instrumental in bringing Chinese investment to the Detroit area (investment that a lot of our politicians have courted). It is my understanding that Amy’s daughter went to EMU so she does know the area and she (Amy) has been active in the DCBA that as I mentioned has been working on marketing the Detroit area in general to Chinese investment.

As a side note, texting, talking, and getting up during presentations while in our cultural norms is considered rude, it is not considered rude in the same way by Chinese cultural norms. And “soft like a female” is a pretty common phrase and describing things in terms of the masculine and feminine are also quite common to the Chinese as well as other Asian cultures. Yeah the project manager probably should have realized that wouldn’t transfer well to the current audience, but I would give him a break. Also I think they had a representative their the night before that sat through the two hours of very similar discussion. I personally was frustrated to have to rehash it all before they were able to give a presentation, because I know others like myself had to leave to put kids to bed and couldn’t see the entire presentation.

On the topic of EB5, I’ve worked on some projects in the past that looked into/courted EB5 investment. Many of them in the Detroit area didn’t go anywhere because the Michigan EB5 Centers were impossible to deal with and things didn’t seem on the up and up. This was 5-7 years ago so hopefully it’s improved, but this is why Michigan at the time was not really taking advantage of the program and perhaps still isn’t doing a great job. While yes, it is to their advantage that investors only have to invest 500,000 a piece in Ypsi, there are plenty places on the East Coast that this is true of also for projects that I’ve worked on and I don’t think that is really relevant to why Ypsi and not in one of the more popular EB5 markets on the East Coast. It would be easier to get investment and work with the regional centers there than it would be here. While I haven’t worked with the “pooled” system that they describe, typically potential investors have to have some role/limited oversight in the company they are investing so often they will look into the investment within the region they are going to relocate to. For many of those investors potentially losing their$ 500,000 investment wasn’t small peanuts either. Also it is understandable given the Asian Business Culture the need for Ypsi City Officials to make a trip to China. It’s not really possible to gain confidence in Asian investors without it and would be considered a bit of an insult.

While I have qualms about the “buying of citizenship” I also view this in the light of other economic development tools that all have issues. Low Income Housing Tax Credits, the main funding mechanism for affordable housing, are tax credits usually bought up by the big banks (Bank of America is the largest buyer of them in the midwest) or wealthy investment groups. Front Line had a special on all the evils of the LIHTC and the middle men making money off it this spring. Most of the big housing advocates and affordable housing funders signed a letter in response clarifying the issues involved because all those involved in affordable housing know we’re screwed without the LIHTC. All economic development incentives and tax credits have these complicated issues and things that make a lot of us a bit uneasy at times, but are also really useful tools to encourage growth. I do have concerns about their funding gap (I wasn’t around for this part of conversation just basing my knowledge from FB comments) and their discussion on using a brownfield assessment outside the TIF already in place for developments on that location to fill part of that gap. Honestly I rather see EB5 funds close that gap than a Brownfield Assessment, but that is probably not a a possibility considering how much is already leveraged by EB5 funds.

So much can change between initial proposals and actual development agreements and I think a lot of what Ypsilantians want can be crafted into that agreement to come up with a development that fits within the community. Given the fallout with the past affordable housing proposals, a large affordable housing project won’t work on that location as I’m doubtful that a LIHTC application would be approved there again. I also don’t think the idea of going low density is great. We have to face the fact that cities are going to continue to grow and high density is really the only sustainable way to do it.

In full disclosure, through my own company, I have approached the development group to consider a focus on energy efficiency in their development plan and the possibility of working with them to help with financing those energy efficiency measures as I think this needs to be a focus of any development that goes on there, given that 40% of green house gas emissions can be accounted for by residential and commercial energy building use. I would love to see any multi-family development that occurs on the site, meet Passive House Standards, which are among the highest standards in energy consumption (more focused on energy than LEED and much higher savings than Energy Star). So perhaps this shades all my comments above, but as I said, I wanted to see these concerns be addressed at any development on that site regardless of what ends-up being developed there. If it ends up being a version of International Village that fits both the communities’ and developers needs, great. If a suitable development agreement isn’t made than I hope it is considered in the next proposal.

One last note, I would also love to see an Ypsi based Community Development Corporation established to help support more innovative developments within the community. It’s definitely not easy though and usually takes someone with considerable connections and/or deep pockets to help head up the board. But its not impossible and could help support the establishment of more community based projects.

If there was ever a time we needed THE REAL MARK MAYNARD, it was then and YOU SHOWED UP. Also, does your plan for water street have something that the people can enjoy? we are all very connected to that land. so are the Belted Kingfishers which LIVE DOWN THERE along with deer, cormorants, herons, black squirrels, monarchs, yellow finches, and more. Whatever we build there needs to have a 1,000 foot buffer of trees and thick vegetation from the river. it is CRITICAL FOR THE HABITAT. We are contacting the Audubon Society and the Huron River Watershed Council.

I really enjoyed reading this. When did this guy become the voice of our community because I like his perspective and want more of this kind of conversation. He’s like a kind mediator I wish I had whispering in my ear when I am about to say something emotionally charged and get beyond the point.

Just to be clear, I did’t say anything of the kind about Chinese building, labor and environmental practices being employed in Ypsilanti. To do so would be ridiculous. What I did say, however was that the EB-5 system is popular because wealthy people in China, having done irreparable harm to their country, are now seeking to flee it. The distinction is significant, and important.

I think it’s more like wealthy people in other countries with a looser sense of property rights and without strong central political influence are seeking to move their residence and wealth to a country where their wealth will be more protected.

Agreed to some extend, but don’t you also think they like breathing fresh air? Many of the people I’ve know from China have desperately wanted to become successful to get their families out. Not because they want a safer place to protect their wealth.

With all due respect, Pete, I have some familiarity with China. And, again, I did not say, as you had suggested, that they were coming here to degrade our environment. I actually said the opposite. The rampant capitalism in China is forcing those out who gained the most, or, at least, their loved ones. I have seen it. Yes, they also want to invest in more secure markets, and American real estate still fits the bill. That doesn’t mean, however, that both cannot be true.

Thanks for being thoughtful and nuanced in both your notes and discussion of such a messy, tricky thing. I’m not sure I really feel like I have a right to have an opinion since I get shit for living in A2 these days, but I do really love Ypsi a lot, feel and see the housing crunch all around me, and care pretty deeply about friends, family and this whole area – and any large-scale project will have inevitable impact in the coming years.

One thing I absolutely agree with is that “we need a comprehensive countywide plan to address the fact that we live in the 8th most economically segregated region of the country.”

We needed this like *yesterday* and the longer we don’t have a plan, the more things just happen (or don’t) piecemeal and the harder it’s going to get to approach the huge problem in a meaningful way.

Predatory wealth creation that leads to disaterous environmental consequences is not unique to China. I’m not sure what sources of this scale of capital wouldn’t be similarly corrupted. The comment re sources of affordable housing subsidy was telling in this regard. I doubt this kind of funding source objection would come up if the project were affordable housing. It seems we are willing to compromise on projects we care about and find any avenue for citing corruption in those we don’t.
I personally have no problem with foreign investment in the US on important projects based on where it comes from. Anti-Chinese sentiment is very real and well demonstrated in all political factions in the US. Pointing that up does not mean I don’t care about inequity or systemic racism in the US (this sentiment, while not expressed here, is coming up constantly in the larger debate about IV) or conditions abroad. It does not mean I don’t understand how gentrification usually works to exclude and why that matters. I welcome the demands by the systemically marginalized to be heard. But I do not see this project as a means of displacement. I see it as a means to provide necessary revenue to produce affordable housing and other social benefits. I understand that all progress contains compromise, some of it ethical. It’s great to vet those compromises thoroughly and ask for changes as possible. It’s not great to pretend there is some alternative silver bullet solution to water street that no one cared enough to explore. It’s not great to assert that people don’t care about affordability or social justice if they support this project. It’s really not ok to say that caring about one form of bias means we don’t care about another. Such litmus testing is simply a way to avoid dealing with complexity. Dear radicals I love and value you, but you do not have the only valid or perspective. You persoective is not more ethical than others. all perspectives are inherently limited and subject to their own bias. You are not the only ones who care about affordability and social justice. I suppose it’s too much to expect from the far left that it treat others with anything other than derision. That it be anything less than certain. That’s how fundamentalist ideology works.

Thanks Mark for creating room for some balance in this debate. For what it’s worth, I also (mis)read your comments about environmental degradation in China as somehow related to the safety of the project here. I’m sorry if I was off the mark. I guess I still don’t understand your concern about Chinese investment here. It doesn’t seem like the worst kind of off-shoring– especially for this project. It just seems like the unfortunate economic norm in current system. I’m open to learning about why this investment here encourages environmental degradation elsewhere.

I also recently attended a local economic development summit focused on affordability in A2 that was participated in by high level reps from the public, private, non profit, by educational sectors as well as many local citizens. That was less hopeful as the conversation just veered constantly away to the need for revenue and more development. (Only 38% of land is A2 is taxed) Affordability and equity was not centered. The entire discussion was centered on obstacles to development. This is the tendency, which is why I welcome the voices of resistance even while I don’t agree with their solutions. Affordability will be very hard to achieve. If we don’t constantly make citizen demand for it clear, as you say, the market will simply serve itself, not the community. Given our county-wide housing shortage, whether we like it or not, we need to familiarize ourselves with paths to smart development and especially the budgetary requirements and the reality of sourcing adequate capital investment.

Ypsi and Ann Arbor housing markets are inextricably linked. I actively encourage Ypsi residents to weigh in on Ann Arbor’s trajectory. I hope they are ok with me caring about their city as I do mine. More so somedays.

I have not seen a single word about council rejecting the bid to build a 65 unit “affordable” housing unit on West Michigan Ave. It would have been primarily for seniors, as I understand, but not a peep out of all the folks complaining about the International Village.

For a project this big, the developer did their homework. My guess is that they had CB Richard Ellis do an analysis of Ypsi and the region. I am also guessing that the CBRE analysis indicated that Ypsi has an enormous amount of potential. Does council have this report?

Without that report in the hands of City Council, they are not on an even playing field with the developer. It could not hurt to ask the developer for the report, or better yet to go to CBRE and have them do an independent analysis for 5 to 10k. What they say may completely change council’s mind about what their position is in the negotiations.

The analysis provides a “predictive model” though, so some amount of faith in “experts” is involved.

Another consideration is leverage. If Ypsi has a project of this size ( with any developer ), it qualifies for all kinds of federal funding for infrastructure and planning, which in turn makes further development more attractive. But once the ball starts rolling, it is important to have something like an “Urban Design Framework” and a community supported Strategic Plan in place through a Convene / Collaborate / Consesus model that identifies and includes all stakeholders. Otherwise there is a good chance it goes off the rails.

I just read your comment. I had some experience a few years ago with federal funding for low income housing, and found the federal funding process messy at best. The LIHTC gave large investors 8 to 10% guaranteed returns. It was the primary funding mechanism for a number of low income projects in north Seattle. From what I remember, the non profit low income housing advocates would use this instead of other funding sources because it did not have to comply with the 20% threshold for poverty at the census block group level. The HUD funding for section 8 and HOPE VI projects are required to not exceed this for one very important reason that was established back in the 1980’s….that the cycle of poverty cannot be broken if poverty is concentrated. That mixed income neighborhoods are a key to the success of people getting out of poverty.

There is an enormous demand in Seattle for low income housing. The problem is that the demand is being driven by rising prices in certain neighborhoods, which in turn pushes people in the 80% AMI and below into the affordable neighborhoods, along with the developments. That then changes the census thresholds, which in turn disqualifies projects for certain funding.

Messy. And then there is the lack of accountability for the dozens of non profit advocacy groups that are awarded millions in Federal, state, and local funds. The only insight into their books is the 990 which shows executive directors paying themselves 150 to 250k a year.

Pete:
“In an email today, City Manager Darwin McClary, revealed that although his office was not involved in any of the arrangements for this trip, it seems that the Chinese Consulate in Chicago was the source of the funds to the Wayne State Chinese Student Association that funded the trip to China for four City Staff and Council members. The Government funds went directly to the International Village Developers to funnel to the Student Group. Seems like a Wine and Dine Junket paid for by the International Village Developers in violation of the City’s ethics rules and scheduled before City Council even approved the purchase agreement and the real source of funding not revealed. Not Good.”

It is interesting that the EB-5 investors are willing to leave China (which apparently, they have ecologically devastated) to move to Ypsilanti and help us remediate our own form of ecological devastation. I believe there is a section of the I Ching devoted to this topic.

I apologize for my error. The investors may not actually be moving here as was ably explained, but their investment could potentially help with the remediation. Perhaps this topic will be on the City’s agenda as they visit our perspective Chinese partners. Also, the term Wine and Dine Junket is inflammatory. It is possible that all wining and dining will be politely declined and only serious discussions will be held.

Community Development Director Beth Ernat reported tonight that the International Village Development Team has lost some of its partners and has not sought an extension or a meeting to discuss a development agreement. Facing a deadline of December 31, 2017, it will be impossible to draft a development agreement prior to that time. The purchase agreement will expire at that time and the Water Street property will go back on the market.

Detroit Metro Times: Chinese development proposal is in a ‘death spiral’

This week, officials announced that the architect and builder are no longer involved in the project. A city official also said she doesn’t known if it has any investors, and there are questions about whether the development team has legal representation.

With no developer, architect, builder, or known investors, the project appears to be nearly dead. The city and what remains of the development team need to sign a development agreement by Dec. 31, or the two parties need to extend the deadline. If neither of those options happen by that date, then the project dies. And at a special city council meeting on Monday night, no council members expressed a desire to extend the deadline.

Council member Pete Murdock said that it’s time for the city to “quit fooling” residents about the existence of a full development team.

“We need to be prepared to put that property back on the market on Jan. 1,” he said.

After the meeting Murdock told Metro Times that the project has been in trouble for a while, and though it’s not completely dead, it’s “in a death spiral.”

It’s not completely dead. Councilman Murdock posted the following to Facebook this morning.

WEEKLY UPDATES ON INTERNATIONAL VILLAGE
Date: November 21, 2017
Subject: International Village, LLC Update

Members from International Village, LLC set up a meeting with staff on 11/21 to discuss next steps and introduce the new project architects, Hobbs and Black Architects.

The International Village team understands and agrees that a development agreement will not be negotiated by the December 31st deadline and will not be pursuing an extension as too many changes are being made with the development team.

The LLC has hired Hobbs and Black Architects from Ann Arbor and are currently interviewing and meeting with potential developer partners. Should sufficient and acceptable partners choose to collaborate the development may be brought back as a new development to Council in the future.

The current project team was informed that any new project application will need to include multiple public input sessions prior to Council consideration of a purchase agreement.

If this International Village fiasco isn’t dead, we should have the good sense to kill it. Then how about developing a plan for what we want and need? City government should then be active and proactive in seeking out developers to bring our plan into reality. It seems like we sit and wait for developers to come to us. We should build on past plans and our current experiences, good and bad, to move forward. But first we have to step over the pile of s___ in front of us. If we put together a group of citizens and city planners, we could come up with something in about 2 meetings.

“If we put together a group of citizens and city planners, we could come up with something in about 2 meetings.” Hubris, Citywatch.
Good luck with that. Your assumptions of inaction on the part of the city and its planners are unfounded. Go ehad and learn the same lessons. Clearly, Ypsi needs to find someone to take on the plot, but, be forewarned, in Ypsi, no amount of civic improvement effort will go unpunished.
I’m eagerly waiting for DAY activists to start engaging in the development process (v. making demands) so they can learn the same fucking thing. There are only 20k people in Ypsi. They all should take a stab at it. Honestly that may be what is required before Ypsi becomes pro-active instead of reactive.
Everybody thinks everyone else’s job is easy…
Fight the Man…
Oh, shit, we are the man.
I’ve met the enemy, and he is us.

[…] discussed the possibility that we could have been lied to about the source of these funds, “(this should) be enough to kill the deal outright.” I mean, I can’t imagine anyone on Council could cast their vote for the project after […]

[…] discussed the possibility that we could have been lied to about the source of these funds, “(this should) be enough to kill the deal outright.” I mean, I can’t imagine anyone on Council could cast their vote for the project after […]

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[…] on International Village, I don’t see how it can possibly go forward. As I outlined before, I had serious reservations about the International Village project before the delegation even left the country, but, now that a good number of our City Council […]